Russia’s Economy, ETF Are Not Islands

Not long ago, Russia appeared to be standing their ground during this global credit crunch, but lately the country’s economy and exchange traded funds (ETFs) haven’t seemed quite so resilient.

Many analysts back then predicted that the country’s benchmark index would grow more than 30% and top 3,000 points by the end of this year. Russia’s economy, experts observers argued, would remain isolated from the woes of United States, Europe and many emerging markets.

The opposite happened. The widening global financial crisis, falling oil prices and the Kremlin’s bullying at home and abroad, have sent the RTS down about 50% this year to just above 1,000 points. The ruble has plummeted and there have been billions of dollars in capital outflows, reports S. Adam Cardais for BusinessWeek.

The truth is that Russia is not isolated from the global economy, as once thought, and the country cannot afford to keep to itself geopolitically. Long-term, the country must focus on diversification through education, health care and infrastructure and lesson the energy dependency and sustain growth.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.